Business Directories

BP reaches $7.8bn deal over oil spill

New York, March 3, 2012

BP has reached an estimated $7.8 billion deal with plaintiffs suing over the massive 2010 Gulf of Mexico oil spill, the company said on Friday, but the oil giant still faces claims by the US government, Gulf states and drilling partners.

US District Judge Carl Barbier, who is overseeing the litigation, said in a court order that the proposed terms of the class settlement would be submitted to court for approval.

He also adjourned the first phase of the trial over the spill, which had been scheduled to begin on March 5. He had previously delayed the start of the trial to allow a group called the Plaintiffs' Steering Committee (PSC) to negotiate a settlement with BP.

The committee represents fisherman and businesses who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent spill from the Macondo well.

Lawyers for the committee, Stephen Herman and James Roy, said the settlement would compensate hundreds of thousands of victims.

'It does the greatest amount of good for the greatest number of people,' they said.

BP said the cost of the proposed settlement would be around $7.8 billion, including a commitment of $2.3 billion to help resolve loss claims related to the Gulf seafood industry.

It said the proposed settlement was not an admission of liability and that BP would assign to the PSC some of its claims against Transocean and Halliburton.

Apart from BP, which owned 65 per cent of the Macondo well, the main corporate defendants are Switzerland-based Transocean, which owned the Deepwater Horizon, and Houston-based Halliburton, which provided cementing services for the well.

They are also suing each other. Several other companies are involved in the trial.

Eleven people were killed and 4.9 million barrels of oil spewed from the mile-deep well in by far the worst offshore US oil spill.

A settlement would remove a significant portion of the complex case, but it would not put an end to BP's exposure.

The oil giant still faces claims by the US government, which is pursuing violations of the Clean Water Act and other laws, which could result in fines totaling billions of dollars.

BP also faces claims from Gulf states as well as its drilling partners. 'Delays or deals made by other players do not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts,' said a spokesman for Transocean.

The US Justice Department said it was prepared to go to trial to hold those responsible accountable for outstanding federal claims.

'The US will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resources damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states,' department spokesman Wyn Hornbuckle said.

David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, said the settlement was good news for the victims of the Gulf oil spill 'who will see their losses compensated much more quickly than the victims of the Exxon Valdez oil spill'.

'It also paves the way for BP to negotiate agreements with the federal and state governments and begin the process of moving beyond the Gulf oil spill,' he said.-Reuters